tapering until next year. they are going to have to say something that tells us about the path that could disappoint to the down side. >> we don't want to hear anything about tapering. the markets have decided we are not listening. >> they are going to have to say something to get the other members of the committee on board. >> my pleasure. thanks, everybody. squ"squawk on the street" begins right now. our our thoughts are with lou reed. i'm carl quintanilla with jim cramer and david faber at the new york stock exchange the final week of october as stocks extend their winning streak to three weeks. apple reported tonight. a fed meeting starting tomorrow. ten-year yield above 25, we have some twos, fives, and seventh on deck. the uk being hit by the

strongest storms of ten years. massive disruptions over there. our road map begins with the major indices at or shy of new highs as we begin to cross the halfway point of earning seasons. it is trading lower in the free market. earnings beat. revenue was a bit short. >> apple set to report before the bell. a chance to see how the newest iphones are really selling. a clash of titans. mcdonald's dropping heinz catsup. the s&p coming off a record high close for the fifth time. dow chasing history within 1% of its record closing high on september 18th. investors will pay attention to a bunch of earning numbers. a two-day meeting of federal policy makers concludes on wednesday and the fed is not expected to cut back on the bond-buying program due to the neck tiff economic effects of the 16-day government shutdown. the day that flow is going to be very heavy this week.

no jobs number this friday. all the adps, claims, cpi, housing, heading our way. >> this is funny. there are still some very important earnings reports. i want to keep an eye on apple tonight. there is a pervasive feeling that no one knows what to do now. yet, i want to come back and say, watch that euro. a lot of our international companies are going to have very good comparisons beginning in the first quarter. you see the international industrials shining here. it is the group that people want to be in. keep on eye on those. there is underneath this current, the international, industrial stocks are the place to be for q-4. that's what i'm following. >> you are neeuro near a two-ye. we got the p&gs last week. this week, the deutsches, the bps, the exxons, the master cards. >> it is funny.

we are seeing this incredible revaluation of the independent oil companies in this country. i had the whiting petroleum, a bokking company. suddenly, the guy comes on and says that outside of denver is twice as big. . if you are drilling in the united states, you can't miss. chevron, exxon, bp, not drilling enough domestically. >> not that much reaction to those earnings for whatever reason. >> they have no growth. they have merc like growth. >> what about the broader market? you are probably happy. nothing says the earning season has been okay. >> if you get a standout company that makes me feel good. there are so many quarters, it is difficult to go over them as they p ha. i went over delta's quarter

yesterday while i was watching the eagles/giants. quite exciting to read about delta's, how they raise the price of tickets. much more exciting. >> if you were a giants fan, it was perfectly fun. >> well, the giants' fans. >> i wouldn't take that win to the bank. >> i'm here with two nongiants fans. >> tell me about dale. >> dale had the best quarter in its history. a big buyback. they bought this refiner. there are so many places where good things are happening. this is like the kansas city chiefs having a perfect record. these things aren't supposed to p ha. economists growth hobbled by the shutdown. a lot of the data this week is going to reflect what we went through. the jobs trend, back below 150

on a three-month average. consumer confidence is the lows of the year. >> every executive that you ask that's international, they say,i had chuck bunk from ppj. this guys an all-american ceo. we were going over how are the communist countries to deal with, how are the socialist countries to deal with, how is america to deal with? he obviously, pro-america, thinks america is great. he did say that the socialists, the dysfunction of the socialists and communist governments are far lower than our dysfunction. >> you want to talk about a reflection of confidence, the lack of merger and acquisition activity. if you have a market in that area, usually, this is a big-time of year before thanksgiving. people are coming out of labor day. you get announcement out of announcement, nothing. i got a lot of risks that were focused on men's warehouse. >> that shows you how pathetic it is right now.

>> that does not mean we will not get a few deals. we will. not much. >> i mean, you got up early to take a look. >> who is going to do the deal today? it is mosaic buying some florida. it was bad because they cut the dividend. the only real news today is that heinz. >> we are actually going to talk about that. in the catsup circles, it is a big story. >> heinz, heinz. >> a lot of intrigue around. >> first, the steelers are bad, heinz field is bad and now it's translated to the core business. >> the three major indices, to david's point about the broader markets, are up for october and september. that's happened four times in 30 years. the past 30 years, only four times have all three been positive from what we consider to be the worst months of the year. >> is that because the taper

discussion got turned upside down? is that because of something else? >> i think that segal said a lot of good things about when you had the tenure go from 3 to 2 1/2, it was game on. no one thought that would happen. that move from 2.9 to 2.5, i think that probably pulled more hedge fund managers. i don't know anyone that was leaning against rates, because it just seemed to be a given. then, the fed showed to be pressed because the economy slowed down. the next thing you now, did you see the housing stocks last week. they were on fire. a couple of notes from home depot doing very well. gasoline, let's not underestimate the power of gasoline going down. it is kind of remarkable. a lot of good things happening away from congress, the president. i always have to say both. >> the further you get away from it, probably the better things are happening. >> let's talk about merck,

excluding items that are 92 cents a share. that was ahead of wall street's forecast. revenues missed as sales of merck's diabetes drug fell. they were hurt by patent ex per rig ri expirations. i look at a note and he was questioni questioning these jenuvia franchise groeth. they believe there was a $60 million wholesale or inventor work done in the quarter. the corrective demand was probably close to 762 million with the prescription trends. >> i live in summit, new jersey. we have all been trying to figure out what the heck happened with that. $9 million taxpayer, huge amount of summit's budget that had

build up this gigantic campus. 88 acres, a gorgeous piece of land. they are shutting to move to kenilworth. this shows you that last job cut, unrecorded merck is panicking. you don't just build up your headquarters and shut it. you don't lay off 8200 people in rapid fashion. versus bristol-myers, which was troubled not that long ago and is now just doing so many things right with the growth franchise. >> a couple at merck, morgan stanley, two companies going very much in the opposite direction. merck is a terrific company but that decision to move from summit to kenilworth was a head scratcher. now i see. this company has to do what they can to make the numbers. >> tote many u.s. prescription volume on the oral diabetes drugs, down 2%. they have to get the pricing or the volume up.

>> everybody is using that. unfortunately, doing quite well. >> i am watching this market cap. still, $137 billion, market value company. although, there will probably come a day not when gilead exceeds that. >> gilead got a good panel recommendation. >> biogen is going to open at a record high. >> biogen, not afraid to cannibalize other m.s. drugs. they brought in the rights. i look at merck and i see the animal health business, which has been so great, not doing well, versus pfizer when they spin off. merck is under fire here. merck has no game. >> no game? >> no game in this great-american one. >> speaking of companies trying to find their game, it is going to be apple due to issue and results after the bell. waiting to see what the tech giant will say of sales of the

new iphone 5-s and the 5-c. the call is on to see the response to carl icahn's buy back program. >> they did kind of give you awe higher estimate. they sold 9 million over that weekend. they gave you the high-end. i have to think apple is very cheap. very cheap doesn't necessarily get things going. the two things that disturb me about apple, the bar is raised by the fact that they raised the bar on the high end for the apple file that they mate september 23rd. icah flchlt has made it to feel like there is not a lot of down side. they are going to have to go to the holiday season with new products. >> i wish it was where it was before all the chatter started. >> what would be bad news out of the earnings? is it possible global sales, 5-s have slowed considerable.

>> bad news would be that the whole dial back of 5-c is now extending to 5-s. the bad news, no inroads in china. big problem in the last quarter. some sort of degradation in gross margins. i think they are doing a lot of things right. i think people don't like incremental when it comes to apple. they want dynamic. they want to have -- apple came up with a device that made it so when you get dressed, you don't have to get washed. you press the button. they expect things of apple. insanity about what people expect out of apple versus every other company. >> that's true but the others continue to get little notches in their belt. samsung, $100 million deal with the nba to put their technology courtside. if they didn't have enough marketing power on their own, that's going to help a lot. watches away from apple are going to have a lot more than people expect. maybe apple needs a watch war going on. maybe they need to get rolling.

>> they would always say, we will get involved when we are ready with a much better product. we don't have to be first. >> i don't want a canal street watch, canal street. in the city, there was a guy that had a $5 watch. that's got to last. he told me it woulds la the forever. >> are you wearing it right now. no, no but the guy had a $5 watch. it was a petite phillippe for that cheap. how do you get them for $5? >> bulk, bulk, you buy in bulk. >> okay. i would be, in fact, shocked were apple to sell. we agree with my icahn. whether they in any way engage. is there some off hand remark. i'm sure he will get questions on the call. >> the analysts have been over and over asking questions. the last conference was a negative one. the analysts were discouraged.

how are you going to respond? jim, how are you going to respond? >> these analysts get into this weird functiok. did you address icahn? >> what are you going to do with the cash? they are not going to bring it back. >> where is repate treeation? have you talked to the president. >> it is not the only big tech name. the road show for twitter is beginning. mid-atlantic today. denver/la next we denver/l.a. next week. we are gipping to see some buys, looking at valuations. are you interested? >> i am interested in making it so that people don't go nuts. twitter does not have the growth of baseball. twitter needs to do something beyond being twitter. i think that's always difficult, because people come in. people use yelp. they buy the stock of yelp.

stocks, estimates raised again. people have been buying the $800 million gorilla. >> $1 billion for grand theft auto. it is kind of like that. >> they will be talking about that over the next two weeks. that's for sure. we are about to get industrial production. let's get to rick santelli in chicago. hey, rick. >> september, industrial production up 0.6. utilization at 78.3. that's a number to pay attention to. 78 30i7b is the highest utilization rate that we have had since july of '08. so that's pretty good number. we still have pending home sales yet to come, dallas fed manufacturing all at the top of hourt and beyond.

rick rick santelli, thank you very much. >> residential, i keep hearing, beginning of the turn in nonresidential construction in this country. people forget, a lot of jobs, a lot of raw materials. that would be something. that's the juggernaut for 2014 if we can get it going. >> when we come back, call and a big squeeze. mcdonald's saying good-bye to heinz. the burger wars have a lot to do with this. we will talk about behind that deal ron paul who has long pushed for a full audit of the fed, his son, the junior senator from kentucky, taking up that battle and threatening to put a hold on janet yellen's nomination, letting the gao have that audit. a look at futures. a lot more "squawk on the street" from post 9 in just a moment. . tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities.

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consul energy selling five key coal mines. a shift in focus to the growing natural gas operations. david, mean something or not? >> i'm not aware of what it means at this point, carl. we know they are coming after coal. >> look, i think that if you could have natural gas growth as we've seen from capital oil and gas, resources nearby, it has

been remarkable. a lot of people probably feel that you are giving away coal. maybe coal is not going to go that much lower. the chinese are still using a lot of coal. coal inventories very low. do you give up coal at the bottom when csf is starting to act a little better. >> gas prices are. we talked about oil but it is the same thing. >> natural gas they are letting out. >> we are burning oil, more natural gas, those flares, than we are using. bufrni buf burning more than we are using because the president and congress have not introduced anything for natural gas. >> oil down three weeks, settling below 100 for the first time since july. when we come back, we will get the first word on the deal from consul's ceo. cramer has some ideas to help you begin the week in the greeb. we'll get his mad dash next.

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[ male announcer ] and our priority is you. go to usps.com® and try it today. about 6:30 before the opening bell. man, the weeks are flying by. another monday. >> no deals. >> no deals. we always have a mad dash. let's start off with bristol-myers. >> one of my favorite companies is, indeed, bristol-myers. bristol-myers is being rerated by two firms, credit sweets and morgan stanley both coming out and saying this cancer franchise

is extraordinary thichlts a gre great company. i always felt when dolan was ushered out has been very forward looking. it is the opposite of merck. >> they have game and merck has no game. >> oncology, some pressure there on prices. an interesting "new york" magazine article. that was a very good piece. i don't know if that's been talked about enough. these are franchises that bristol has managed to accumulate. they recognized they had problems and they were not going to say they were going to cut their way into growth. that's the problem with merck. all it does is cut. you need to grow. bristol is growing. >> let's talk about rig. >> with oil, what people think is offshore drills has been incredible. brazil is starting to drill

again. mexico is getting back in. off the west coast of africa. you need the latest technology. the transocean rigs are losing share. you want to be careful with this stock. a lot of people feel it is undervalued. it is not working. i say stay away. >> it is up less than the market. it is not macondo. you need to continue to upgrade your rigs and people feel transocean has not spent enough money on new rigs. lots of other stocks we are going to be watching. the opening bell is just 4:30, 4:50, away. right around there. ore knows hoe a saturday crowd.

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like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. you are watching cnbc "squawk on the street." apple earnings tonight, the fed meeting tuesday and thursday. a lot of econ data. the twitter road show begins. look at the list of the companies reporting. some media names, a lot of

banking names, industrials. >> i find that this aftermath of what happened last week where we were really trying to figure out which stocks we can circle back to, whether vintage rates stay calm. maybe we can go back to some of the higher yields. i still see a lot to like but you are going to see exxon and chevron. these are important stocks. they do tend to color the market. we should be focused on annadarko. we should be focused on companies that are drilling domestically. pioneer. >> we will look and say, geez, not a lot of growth there to these big, gigantic companies. it is kind of a ho-hum week. ho-hum in terms of the companies that report. if apple could set the tone here, i don't want apple to be disappointed. we have had such a good run. >> it is sort of the gorilla in the room empeericily.

the size and some of the issues that face it and the penetration of its products. >> gm, the auto stocks will be a source of strength if you can get that. nice europe, nice asia. >> i like toyota. >> toyota coming back. that weak yen strategy clearly working. >> there is the opening bell and the s&p at the top of your jean. charles schwab, investment management celebrating the recent launch of the swab fundamental index. the company markets and licenses a number of consumer brands. speaking of consumer, there will be a lot of brands in that space to watch. bkw, burger king, with a .9 comp, the exact same comp that mcdonald's posted in the recent quarter. >> a lot of publicity about the fries. they ended up giving a lot of pizazz to that name. we haven't thought about that.

mcdonald's, everybody expects so much at mcdonald's and so little of burger king. expectations. >> this was a spak. franklin was involved in this. guys from 3-g, it is their company. the same company that is now running heinz. >> right. that's the problem with mcdonald's. a little competition there. >> exactly. >> by the way, we did get a comment from mcdonald's about why they stopped using heinz. we have several u.s. catsup suppliers. they are branded fancy catsup, not made by heinz. they serve in two markets, pittsburgh and minneapolis, apparently. this sort of raises the questions of you have business dealings. >> and overseas, they use more heinz than they do in the states. >> i never thought about it. heinz is the best, isn't it? >> they certainly will tell you it is. although, it does have high fructose corn syrup in there. >> hunts is when you weren't

doing that well. this is the way it was. then, when your dad had a good week, it was heinz and then miracle whil ap when you weren' doing that great and then welch juice without the water and when you had a bad quarter, tang. your mom would say, listen, the astronauts like it. then, tropicana would appear and tang would come back. ups and downs of the business psycher. >> your farmers, jim, are going to straddle the entire s&p. bristol-myers at the top and merck at the bo bottom. the stock went from 47 to 49. growth stock people, this he don't want cuts. they don't want financial engineering. listen to him, cook. they don't want that. they may not want what carl icahn wants. what you want is to see a

reacceleration of growth. you want accelerated revenue growth or arg and bristol has got it. >> the story overall for the q-3 earning season, eps growth, about 2.3. we began the quarter, estimates were still at 6.5. so is it your sense that earning season is turning out to be a disappointment. >> i think it is relevant to the domestic product. it is okay. we have had a slowdown of gross domestic product. a large part because of all the problems in washington. it is difficult for many of these companies to grow that much more. i think this mortgage rate we are still living with the mortgage rate spike. we still don't have housing back on its game. i know that some companies that sell into housing are doing better. you lost that terrific prop. maybe it can come back. i know pulte had a decent quarter but it was because they made more money per home, not because they are selling more homes. gasoline cob a savior for retail. we have a week less in the holiday season.

so i think ge has kind of slowed and the company, very hard to outrun gdp, very hard. >> on housing, were you surprised it was fragile enough to be affected. the move up was a dramatic move up in interest rates. historic cli, historically, it is still extraordinarily low. it coincided with the affordability going up. >> you heard a lot of people say, whoa, holy cow, the house went up and the mortgage went up and you said, i have to think about this. you didn't have to think about it. i think it has to do with the notion of, geez, i guess i should have moved before. >> didn't it strike you as weird that some of the banks laid off some of their mortgage people so soon. >> jobs at wells fargo. >> he is a great executive. >> financing also such an important component. that may not come back. if you haven't been able to refinance over the last four

years. >> the unemployment situation was not helped by these banks taking huge cuts because they just don't mess around anymore. jpmorgan, could the headlines get worse here? even as they settle with fanny, i read about how bad they are with fannie. jpmorgan cannot only catch a break. if you say anything good. do you mind if i just slide jpmorgan? >> i can't imagine what you are referring to. >> geez, i said something good about jpmorgan. once i called jamie dimon a loser, i am a winner. now that i say he is not a loser, i'm a loser. jpmorgan is like saying something good about the cowboys, dez bryant. >> we have to change the subject. 1:04. did stafford have in spike. >> he just went vertical. >> an exciting game. >> you mentioned gasoline and

the effect on retail. there haven't been a lot of incredibly bullish calls on retail. we talked about the city's top picks. they are the dollar generals and the walmarts of the world. when you look at the garden variety retailers, target is glued to 63. macy's can't get beyond 44. these are tough. starbucks, this week, that could be interesting. it is in the core retail. you need to see china be addressed. there were some concerns about whether china is too expensive. they are gouging the chinese. starbucks is my retailer that seems to have momentum. that teavanna. >> the price is so high, like going shopping. >> shopping for apparel has been extraordinarily weak.

>> we head into the selling season. that vp core yelled. people deserted underarmor. i don't think they should. sticking of the idea of the food retailer. panera conference. they are having problems meeting demand, making the product well t was a very soul searching conference call. >> some people did scoff at this notion that we are so popular we can't handle it. that kind of rubbed some people the wrong way. >> i go to my panera and sometimes i feel, really nice people at my panera. i call it my panera. it is everybody's panera. it is not my panera. there is a notion they ought to have more people behind the counter. maybe they will have to spend more on labor and machines. people leave when they see a line. that's why chipotle has been so -- >> you have just been to chipotle.

>> that's unfathomble. >> i didn't say they have never been. i have never been. >> you just go to taco bell. >> we used to go to one near fort lee. >> when you stay up really late at night, taco bell works. sometimes because you have had too much club soda. >> specially club soda that is mixed with something like lime. >> back to your wild days, jim. >> and that basket of crystal burgers, that could change the whole world let's get to pisani, see what's moving on the floor. dow down 15. a modest move to the down side. we are halfway through the earning season. a couple of trends. earnings are improving. you know the game. they have knocked the numbers down going into the quarter. we started about 2.9% gain in the s&p 500. right now, at 4.5%. guys, a significant gain. 67% are beating the historical

average. a little better than expected. only 51% are beating. that is below. here is the typical trend here. a little bit of disappointment on beating on revenue. earnings continuing to hit record highs. that's what moving the markets forward. rotation is the other big story of the year. stocks have done well. different sectors keep assuming leadership positions. look at how we are doing. defensive names like telecom. some of the big industrial names. industrials and materials are doing better. the s&p at 4.6%. what's been lagging is energy, health care and tech. all of those sacktoectors had leadership. nothing is really down. this is why the market is up 23% overall for the year. let's move over and show you what the small caps are doing. small caps have been

outperforming big caps all year, by 10 percentage points for the year. about 33% to 23%. this quarter, in the last three weeks, small caps on the top line are having a small outperform mans. this generally indicates the economy is improving. smallcaps tend to underperform form when the economy is moving to the down side. the big worry, the old reversion to the means story. you can't keep going up double digits every year. it doesn't happen. four of the last five years, we have been up double digits. 2008, we were down about 40%. how can you go up 10%, 20% next year when historically, the averages work against you. 10% would put us at 1936. interestingly, that's where a lot of people are in terms of their estimates for 2014. still, pretty early in terms of the earnings today. earnings are a bit on the light side today. you did say take a look at

biotunidic. they had great numbers. they raised their guidance. merck missed revenue expectations. it is moving down a little bit. armstrong world look pretty good to me. they beat on the bottom line. revenues were a little bit light. big story throughout the whole quarter. they have lowered the high end of their 2013 earnings and revenue guidance. that's happened a lot in the last two weeks or so. still pretty good numbers. overall, we are improving with 50% of the quarter over. back to you. >> thanks, bob. bob pisani. let's go over to rick santelli and ship to the bonds and the dollar. santelli. morning, david. if you are an options trader in the treasuries, boy, bring a pillow. as you can see on this two-day chart of tens, the same is true for fives, 30s. lately, not much. if you open the chart up, this is fascinating. open the chart up to the last

fed meeting, 17th, you can clearly see that rate it's were close to 285 at the last fed meeting. they have come down rather mark edly. if you are a technician and you like what may be a top, open a chart up to mid-june. count how many bottoms are between 247 and 251. quite a few. that is your support area. let's switch gears. ever since the last fed meeting, it has been risk on. look at two etfs. the lqd, hyg, junk, high-yield. it is up, up and away in terms of price, drops and yields. it is climbing a little bit. if you want to see where the damage started, look at employment data fridays or go back to the last fed meeting. look at the tee deterioration

since february. carl, back to you. when we come back, former apple ceo, john skully, with a unique perspective on the tech giant ahead of its after the bell result. what does he think of icahn's push for the $150 billion stock buy back. a lot more "squawk on the street" will continue in a moment. so ally bank has a raise your rate cd that won't trap me in a rate. that's correct. cause i'm really nervous about getting trapped. why's that?

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welcome back to "squawk on the street." watching food futures mixed this morning. west texas intermediate consolidating at lower levels after a big drop last week. lower than average volume because traders are tentative right now. they are waiting for that fomc meeting saying that is the big catalyst this week. natural gas prices taking a plunge as well. that as weather forecasts have been revised showing temperatures to be slightly

higher than expected initially. a final quick check on gold as well testing at 1355 level overnight. now hanging out just under 1350. a key technical level. we'll be watching bouillon closely into that meeting as well. a stronger dollar today. that is hurting gold. that is also pushing oil down. carl, back to you. jackie, thank you so much. it is a catsup changeup. mcdonald's announcing plans to end their 40-year relationship with catsup maker, heinz. heinz new ceo was formerly the ceo of burger king. he is still vice chairman of burger king's board. mcdonald's firing heinz is like blank sparring with blank. >> 57 varieties of a fight there, man. in the meantime, you were talking about dr. oz, i think. >> dr. oz is such a nice man. >> i think we have a photo.

>> dr. oz is hugely famous surgeon in new york. people forget, this is not a tv doctor. this is a fabulous doctor who is on tv. one of the nicest people. a fabulous ad this weekend for the nfl series about why i love the nfl and oliver was in the box. his son had a good tackle. wow, what a guy. >> he was able to keep spirits up in the box. >> he let me -- next time, i have to have a psychiatrist in the box, because the eagles are so bad. i have seen 14 of our last 15 games have been losses. dr. oz brought a note of cheer to a cheerless box. he is a gent. >> there is always next week. here is what's coming up next on "squawk on the street." coming up, volatility hurting your head. >> he has a headache. >> no, i don't. >> how about now? >> it is coming. >> cramer has the cure for the

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let's get six in 60 with jim cramer owens corning, quarter disappointing. key and bank of america have negative things to say about insulation did not have the good business. >> you know who is having a good day, elon musk. >> this is solar city with a buy. they have great sales momentum. >> price target up for cabot. >> i bring this up because of the console. this is a pure play nat gas. i think the stock can go higher. >> you were just mentioning game trust. >> suntrust says it is going to be a terrific quarter.

i know it seems overplayed. it is not done yet. >> relamax? >> i am of the belief that existing and new home sales have sloped. remax came at the wrong time. >> eden, big price target up. >> sandy cutler was on the show and talked about the big turn in construction span in 2014 doing better. the stock was when it reported it was looking down the dollar, and then it zoomed up three. it is consolidating here. it's good. >> speaking of consolidating, you are going to stick rndarounn the next hour. what should people be thinking about when it comes to coal versus nat gas? >> not only the secular decline in this country. are they going to make these 40-year coal plants shutter when jimmy carter was president? he said, we can become energy independent. a lot of people had the right to

laugh. he did make the big utilities build coal plants. >> do they refurbish, spend a lot of money? will the epa force a closing? >> that makes it so that to get out of coal isn't a bad move. >> as the price of enjergy come down, they need to prove they are going to lower their costs. joy is the big coal. they make the coal. they had no orders last quarter. this coal business, still doing well in china. obviously, the chinese wish to some degree that it weren't. they are opening a plant every ten days for coal. energy costs coming down in the united states has meant that so if you could repay tree eight dollars, they would build more factories. it is so cheap to do business in the united states. i wish the president and

congress would embrace that, get that corporate tax rate down. what's coming up on "mad" tonight? >> one of the greatest executives you never hear talked about is deb kafaro, she runs a fantastic real estate invest trust, phenomenal performance. the stock is down. the rates have not done well this year because of the spike up in interest rates. they are not that expensive anymore. this has been historically, one of the top three or four in the group. >> we are going to see you in a few minutes. get a cup of coffee and come back. >> i will, thank you in addition to jim cramer's interview with consul energy, we are going to look at how apple is positioned for the results tonight. is facebook at the nasdaq or twitter when it launches? which of those two is the better investment for you? also ahead, we have pending home sales, how strong is housing now and is the fed the real wild

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welcome back to "squawk on the street." the dow and s&p extending their weekly winning streak to three. dow within 1% of a record as we continue to look forward to a fed meeting this week. apple earnings tonight, a lot of econ data as you know. we are going to have that poll on friday morning. there is not going to be a jobs report until the following week. plenty to keep us busy. >> what is really interesting is how the small caps, the russell 2000, are accelerating higher as we come out of summer? what that says, afrm"a," about economy. given that the retailers are coming back with force. that is usually a late stage indicator. >> i'm told the will shire, the

big view of stocks in general is used to tripling the lows. in the meantime, there is herbalife and masco. pending home sales is about to come out. to are that, we go to diana olick in washington, d.c. carl, pending home sales down 5.6% month to month in september. this is a huge miss. the street was looking for a little less than 1% decline down. 5.6% month to month from a downwardly revised august figure. pending home sales are signed contracts in september, not closings. an indicator of where we are going to see home sales in the fall. lower. pending home sales index, down, 1.2% year over year. this is the first annual decline in this index in 29 months. just over two years. it is the lowest level since december of 2012. realtors chief economist lauren

young says declining housing affordability conditions are likely responsible for the bulk of reduced contract activity. he notes consumer confidence and the government shutdown may have played a role in this. the shutdown did not begin until october. so these numbers are from september. regionally, breaking it out in the northeast, pending home sales down 9.6 month to month. in the midwest, down 8.3%. in the south, down just .4%. in the west, down 9%. a reminder. we are here at the mortgage bankers association convention. we will bring you the godfather of mbs, lou ranieri. diana olick with the latest on pending home sales. let's get some reaction from our panel. the fed, we learn what they do on wednesday. joining us know,now, joseph and

steven. joe, first of all, we know rates have gone back from almost 3% to 2.5% on the ten-year. is that going to limit the damage or are we getting a glimpse on how housing is going to do? >> affordability got crushed but the levels are higher than at any point in the last reception. it has come down a lot. banks are probably more likely to lend with a steeper curve and higher rates. >> what i'm asking is this. from the point of view of, is the housing market, an important part of the broader recovery taking a sharp leg down or not? what do you think this report tells us? >> pending home measure transaction for sale. there has been so little building, not so much to buy. eventually, supply constraints will weigh on this series. construction is turning up. builders had a great run this summer. xloes to a record high. i think you are going to see housing accelerate through the

fall. >> steve, are you as optimistic? >> i don't know if i am optic mystic in the short-term but in the long-term, i am very optimistic. if you look at housing starts, we have not built this few homes going back to the 50s. we are literally building nothing. >> this isn't a supply story. contracts for sale of existing homes fell by 5%. that has nothing to do with the supply. >> it has nothing to do with supply but the fact of the matter is, over the longer picture for a long-term investor, there is actually going to be very little supply out there. over time, that will impact pricing and statistics like this. month to month is very difficult to predict. over the long-term, housing will be in short supply as population continues. if we get household formations back to where they were pre-2007, there will be a dearth

of housing. >> people's propensity to buy homes has changed. there is a different atmosphere in the country. people got burnt by housing. they may be more reluctant to go in. you used to buy a house, because you assumed inflation would erode the value of your mortgage over time. wages would rise. in people think there is a bubble in certain parts of the housing market, they may be reluctant to go in. >> the point you make is right. home ownership is coming down. it will move down from 60% to 70% at the peek. having said that, the residential vacancy rate is at a 12-year low. there is still not a lot of properties available for the people to go in to. you are seeing the multidsector do well. they have gone up dramatically. that's one of the reasons why the private equity firms have

gone into the housing market to take supply out. the rental yield is around 9% in some places. >> it is a great return. steve, i'm curious. where does this then leave an investor as we start to head into the end of the year? >> well, my view right now is that you should avoid all of these high-flying tax stocks. i think they have gotten incredibly expensive and are not investable here. there is a lot of value in the equity income space. mortgage rates are trading at 80% to 85% of book. you are buying them at quite a discount here. a lot of mlps, specially upstream mlps that are yielding double digits right now are a very good bargain. i would stay away from high-flying tech. >> a couple of ideas from steve, joe. thank you. appreciate. let's get to the big corporate of the day. apple, the tech giant, will

report earnings after the bell tonight. how has the stock performed historically around these sorts of earnings announcements. see ma mo seema mody is at apple with more. >> that hasn't always resulted in apple shares trading higher. apple did gain 5% after reporting second quarter results in july and moved lower after reporting a beat on earnings in april and january. over the past year, apple shares on average have moved lower the day after reporting earnings. experts say that's been a common trend, not just with earnings, even after apple unveils a new product. shares on average have traded down. the key may be looking at a lengthier time range. our cnbc time range found on average, shares down tend to trade up 2.3% a week later and 3.3% a month later. in terms of what to expect after apple reports third quarter earnings. tonight, it won't just be about

whether apple beats or misses estimates. with the upcoming holiday season, the real number to watch will be first quarter guidance for december. that will be our first full look into iphone demand. carl, back to you. >> thank you so much for that. let's continue the conversation on apple. dan morgan is an apple shareholder, ramon llama is the mobile phones research managers at idc. good morning. ramon, guidance aside, what is the key level for that number? is it 34 million iphones? >> 34, 35 seems to be the consensus. that seems to be right on track, because prior to the launch at the end of september, everybody was holding back, even with back to school shopping. i'm going to wait a little bit longer and see how that iphone 5-s and 5-c looks.

34 to $35 million is right on track. anything higher will be a hunl surprise. anything lower is going to say how soft that demand was in july or august. 34 million, 35 million, that's something you could probably sink your teeth into. >> dan, because the a 5s and c had a great weekend is the risk to the up side? >> all the preliminary i have seen is pointing to strong demand for those products. we want to take a look at the ipad. we are looking for about 13 million on the ipad this quarter. this will be the second consecutive negative quarter of growth if it doesn't succeed 13 million. we had the first negative growth quarter in the last quarter. not only iphones but it would be nice to get an up-side surprise on ipads. anything above 13 million would be a huge positive. >> we don't like up-side surprises, dan. >> i know that, simon.

>> the truth is, you only have two weeks that both of the bones we were available in the time they were reporting. how are you digesting these reports that apple has actually been cutting production of the cheaper 5c? in fact, the $100 discount where they have priced it may not be enough to invigorate it in the emerging markets for more price conscious people in countries like this one. >> a huge factor. as you know, the cheaper phone going into the emerging market is a big growth for the iphone. how are they going to manage, like you said, the short window, in this quarter? how are they going to handle gross margin? >> i think the consensus is 37.1%. the lower priced phones have lower gross margins as opposed to the higher end phones. how is that going to impact gross margin going forward? i think that's a key issue going into this quarter and obviously next quarter, which will be the

holiday season? >> ramon, just a question here about the elephant in the room. that's what to do with apple's cash? do they pursue the icahn strategy of a massive buy back. do you have a few of which would be better or which you would rather see? >> looking at all the options on the table, a lot of folks are saying this carl eye this carl buy back is not such a bad idea. this is just a snapshot in time. what i'm more curious about is what's going to happen in the fourth quarter. the new ipads and iphones and pcs are going to be out there, it says, how much more profit are they going to be able to post? having the plan of stock buy backs will have huge effects on how well apple is going to be

reporting later on. take a look at what apple is going to say. >> what are you doing with your holding? where is your head on reducing it or perhaps buying more apple stock? >> a lot of people inevitably might be hoping that the stock falls and they get a better entry point. does the interest in carl icahn put a flaw where we are now. >> he with have talked about this before. our original entry point was in 2005 at 35, 50. we have a massive profit from when the stock was originally placed on our buy list. in terms of new money coming in, i think the stock is still attractive. on weakness, i think it is above .500 again. if it can get back down below .500, it becomes very attractive. you have new legs of growth going forward that we don't know about. iphone 6, we don't know what's going to happen with the i-tv. new products coming out down the

road in china and so forth that can drive growth going forward. i think people have to have a long-term perspective on the stock. it is in a little bit of a bumpy patch now. it will get back going to the type of performance you are accustomed too, simon. >> it is all about simon's expectations in the end. >> those are tough expectations up next on the program, consul energy forming after announcing they are selling five west virginia coal mines. the consul chairman will join us live right after the break with his take on his deal and what it meeps for the business now. squawk on the streets will be right back. americans take care of business. they always have. they always will. that's why you take charge of your future.

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mosaic is going to buy the phosphate business of cf industries for about 1.2 billion dollars. they are looking to increase their production of phosphate. they will fly mosaics with 1 million tons of ammonia used to make the phosphates. both company shares are up on that deal. back over to you. a tough, very difficult transition to understand. consul energy selling five of the key coal mines.

shares trading lower. first on cnbc is brad harvey, chairman and ceo of consul energy. welcome to squawk on the streets, sir. good to see you. >> good to be here. you are only getting out of thermal. you still want to be able to be in that expert call, because i would think that -- you want to get out of coal entirely and go all in nat gas. >> the fastest growing fuel internationally is coal. the fastest growing fuel inside the united states is natural gas. it is a natural for us to hit both markets. this is just a move to get away from the nongrowth domestic side and grow worldwide sbeas well a domestically. >> is this all a statement that the epa has said you are not going to build any more coal plants in this country and why not diversify away given this country has turned very hard against using coal as a fuel. >> well, yeah. we -- this administration says

we shouldn't be using coal going forward but we use it every day. there is still 1 billion tons being burned in the united states. internationally, it is growing very rapidly. so we are looking for that market. we are picking natural gas to grow on internally. that's what we are going to do. >> why cut the dividend. you still have a lot coming in. is this just because the typical model for the enp companies do not have high dividends. >> that's right. we have cut it to match where the enp guys are going. think of it in terms of ften marcellus wells. that is better than paying them a dividend that they get taxed on as we see it. we are going to grow natural gas very rapidly. >> i don't know what you feel about the share price response to the deal today. you certainly haven't rallied.

there was an expectation in the mark at the time that possibly, you would split the company into two. i know some of the parts valuations have been at $50, oil, gas, gas, oil. >> right. >> i think you eluded to the second quarter that you might be open to that. today clearly signals that is not in the cards. >> when you look at it, this was a major step. it showed we were very serious about growing natural gas as a premier place. it would be a natural gas company with the coal piece. once they both become mature, we will look at that thing. we are not afraid of that. that's just good business. we are using these assets at the right pace. >> to be cat gogorical if we ca

we are not going to. >> right now, we are going to grow the gas company and not borrow money to grow it. once it is mature, we will take a look at it at that point in time. >> can you explain to people where you see coal prices headed from here and how important it is that there might be a supply glut in some parts of the market and perhaps more constraints with regard to the rest of it. >> right now, we are at the bottom of the coal market, internationally as well as domestically. there is a lot of coal coming offline in australia shl, as wes the united states. we think that will turn and coal will come back to high margins. a lot depends on demand. the economy has to come back before coal comes back. it is demand for electricity. >> if you think coal is coming back, why not have waited to do this sale. >> we got fair value for what we got right there. these are long-term contracts

for the domestic utilities. there was no reason to waitme. we can redeploy the cash. we think that is the way to go. >> there are some that believe natural gas prices will stay quite low for quite sop time. what are your feelings there in terms of the growth, not just of the fuel and our ability to produce it but to use it? >> well, we're expanding the marketplace and keep in mind, the people like con sol consol energy, you are making pretty good return on your invest. volatile. a good place to grow. >> mr. harvey, thank you so much for being on talk on the street. interesting situation. cnx. i have to tell you, i feel that

this administration is not going to ever let a coal plant be built. that's why you have to get out of that game. >> you have been pretty consistent on that. >> epa has decided. don't build any more coal plants in this country. finished. >> thanks for sticking around. >> i'll see you later, jim. straight ahead, a fed fight brewing. senator rand paul threatening to block the chair nomination. can he succeed and what does this controversy mean for this fed meeting?

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>> the fed not expected to taper at their meeting. they may more clear the reasons they actually would taper if they get around to that.

we await new developments in a story we broke on friday and will be following throughout the week. kentucky senator, rand paul, announcing he would put a hold on janet yellen's nomination to force consideration of his bill to audit the fed. paul notified leadership unofficially of those intentions last week and is expected to make a formal notification this week. republicans and democrats differing on how important this move is. they point out that paul's bill has 25 co-sponsors, including michael crapo that will consider his nomination. not so easily dismissed by republicans which include hatch and mcconnell are also sponsors and a single democrat from arkansas is a co-sponsor. because of the procedure, he needs 40 votes to force the vote and say it is unlikely he will get that kind of support. paul's bill calls for auditing the fed's monetary policy and fed officials have publicly opposed it saying it could put a political chill over the making of policy. they fear the threat of an audit on the eve of a controversial

decision to raise or lower rates. the question, whether the continuation of the fed's policy is likely to happen. it will require some seeding of power or authority to the opposition, kelly. >> yes, steve. so many questions. a reminder, of course, that we will be talking live with senator rand paul's father, ron paul, at 11:30 eastern, to hear what he has to say about his son and janet yellen. >> we have had a conversation backstage, if you like. i think you were part of it, steve. remining everybody that janet yellen is vice president of the feds. >> i am not 100% sure about it. it is kind of complicated, simon, in that ber nan key is the chair of the federal reserve board and the federal market committee. there is a different vice chair for the fomc, bill dudley. there is another thing in the act, simon, that says if the new

person is not appointed, the old person shall stay. whether or not that person has to stay is unclear. so you could see bernanke remaining in office if yellen is not approved or if he were to leave office, yellen could potentially rise to be the chair of the board and dudley, the chair of the fomc. i need to run down that possibility, simon. >> steve, we would love to know if there is any chance that bernanke will have to stay if this doesn't all go through. >> that was your of the federal reserve act. the other person shall remain. >> i guess they lock the doors and what? that's the house arrest. >> the great thing is only with you guys we would get into the inner workings of the federal reserve act. >> it is going to be so important. >> their mothers must be so proud. thanks so much, steve. see you soon. we are halfway through earning season. we have some big beats and big misses so far.

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about an hour into trading, pending homes did decline for a

second straight month. bristol-myers in a new multi-year high, up almost 6%. month rg begstanley reaching th rate. visa among the stocks hitting some new all-time highs. the dow up 47%. >> we're about halfway through earning season now. so far, 68% of the earnings have come in above estimates. 12% and 21% below forecast. so what can we expect? kim short and dan greenhaus, good morning to you both. christine, what letter grade do you give earnings seasons so far? it seems like a relatively consistent performance. >> you are right. we started out a little rocky.

this puts us on track for a regrowth rate. between 25% and 26% range we are expecting, that would make it the strongest quarter of the year. >> reuters on friday saying if you exclude jpm, we are talking about 6% earnings growth. you include them and that drops by half. >> financials is only on track to grow about 3% on a year over year basis. however, that's double what was expected at the beginning of the quarter. financials were expected to be down. jpmorgan didn't do as badly as they were expected.

we are seeing financials improving as the season goes on. in the beginning, like i said, this he were expected to be one of the laggers. not great, 3%, but adding a bit to the overall growth rate. >> dan, what do you think of earning season? >> the numbers are the numbers. christine is right. 5% to 6% growth rate is where we are. if we end up with a 5%-6% growth rate, that's a pretty good earning season. the one issue our clients are starting to hone in orn is the manner in which the earnings beat has picked up. that includes a combination of stock buybacks, lower tax rates and one-time items that if you were more bearishly inclined, you could focus in on to be more skeptical. >> i am trying to get a handle on where we are in the rally. 160% from the 2009 lows. so i'm trying to work out whether this rally is strong and has a long way to go.

if i look at the way in which the smallcaps, the russell 2000, are rallying faster than the dow, that's usually an indicator the economy is getting better. we are on the brink of further big stock market gains. >> there is visually two parts of the answer. the first is a shorter-term story and a longer-term story. the larger conversation resolves around whether or not we have moved out or shifted out of the secular bear market that's persisted since 2000 into a secular bull market. a shorter term of the question is whether or not five years into an expansion or five years into an equity rally. we are in an up-turn here that's going to last 15-20 years.

any 10 to 15 percent decline is supposed to be bought. how you feel about those answers tells you all you need to know. >> on the subject of the federal reserve, it seems to me we have one major achilles heel. everybody has convinced them seches that tapering will continue to the end of the first quarter. what happens if we get the statement and they say, we might taper before then. this is a very confident market. does this fall out of bed. >> peter fisher is on "squawk box" this morning and i want to align myself to what he has so say. there is almost no chance on the upcoming meeting that they put some time type of a date certain. i think they have to be concerned about market expectations and the people we talked to are concerned about market expectations. tapering in december or march isn't meaningfully going to change the larger story. you are talking about a few

billion dollars. >> it is a signal to sell down. it is a signal to change direction. that's the issue, regardless of what q.e. does. >> ultimately, what matters is earnings. as christine can attest, stocks can't go up if earnings aren't doing so z to that point, what happens if a lot of that is driven by buybacks? is there a way of isolating that impact here? >> if you look at the overall earnings per share, we are looking at $27.23. it is not only about the growth rate but it is the fact that we've been having quarter after quarter of records. so you have to assume at some point the growth rate is going to shrink. we are looking very closely at revenues. as you know, the last few quarters have been quite dismal for revenue growth. like dan has mentioned, not only

stock buybacks and accounting measures. revenues, you can't do that to. what you see is what you get. on this quarter, we are looking for 4% revenue growth. that's the highest revenue growth rate we have seen since the second quarter of 2012. that's very positive for earnings going forward. i am in the middle of the buyback to the purchase. interest collapsed from the peak to today. that's an important component of bottom line pieces. thanks very much. dan greenhaus. >> netflix is the high flyer. most people were headed for the exit and the stock was at a multi-year low. what other ugly duckling stocks

are out there? we tried a simple screen for stocks. it traded at a slightly evaluation over the overall market. first, it's apparel company, gap stores held namesake stores. they now trade up 1.1 times sales. in other words, you pay just $1.10 in stock price for every dollar of sales they generate.

both stocks are beaten down and could rise in value. each is facing their own very stiff head winds. management at gap has to find a way to preserve profit margins as much as possible. jcpenney needs to get shoppers in the door period. they need to reassure invefstor they will stay solvent. both companies head into a critical holiday situation with a consumer that is generally spending less money. there is this two-factor basis model we have done for demonstration. a lot of investors are using morrow bust to come up with what could be the next netflix. take a look at some factors. that's why investors are looking or shopping for the next netflix. back over to you. >> the one that sticks out to me. dominic chew there with a look at some of the ugly duck links. facebook and twitter, some of the biggest social networks out there. they both have hundreds of billions of active users and multibillion dollar evaluations. when twitter goes public here on the floor, the new york stock

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welcome back to "squawk on the street." check out shares of facebook trading around $50 a share near session lows. facebook reports their earnings on wednesday after the closing bell. the options market is pricing what could be a 12% or more move in this stock up or down. so carl, facebook shares showing some action early in this trading section. back over to you. rough day. twitter begins its road show leading up to an ipo that may be the most exciting since facebook. do the similarities end there. could twitter spell trouble for

investors viewing it through a facebook lens. harry mccracken is an editor on the cnbc news line. guys, good morning. >> good morning. >> i want to tell you what cramer said this morning on the 9:00 a.m. he said, twitter does not have facebook scale or growth rate and they are going to need to do something beyond being twitter. do you agree? >> absolutely. i do agree. i think what twitter needs to do is morph into one of these little apps to manage your twitter account. that let's you realize the power of twitter by setting up columns to follow. right now, i think the average person, this has been said 1 million times, it is so true, doesn't really know how to use twitter. where as using facebook is like shooting fish in a barrel. my mother has a pretty good job navigating it. she has no include on how to use twitter. she didn't know how to start. >> our parents are on facebook and they have not yet graduated

to twitter. the road show is going to kick off. a lot of it is going to surround being a player in the ad market. adam bain, their head of revenues in the new ad, week 50 this week. i wonder if the story is going to graduate to something about a premium service, about selling user data to third parties and stuff like that. >> it's trickier for twitter to be good at making a lot of money than facebook. simply because facebook knows so much about us. they know our identity, who our friends are and who we like. it is instructured and simple and you don't have to use your real identity on twitter. targeting advertising is nowhere near as straightforward as it is on facebook. >> what do you make of rocco's point that it is a little bit harder to use. there is something about it. it is a little impermeable to an average user. >> there is always the hop. you are kind of on your own at

first. that's always been true of twitter. you don't want twitter to be everything. for the longest time, people have told twitter it should do more than 140 characters. one reason it is doing as well as it is, is because it ignores a lot of the people that say it should be more complex. that's part of the success so far. >> i find it interesting to see how. more circumspect the media is about twitter than facebook. the real question for many is what's going on behind closed doors, harry, about the pricing. if the pricing is low enough, a lot of people are going to make a lot of money at the open. we will see where the stock trades after that. what did you think about the range that they came out with? so many people, it is lower than they expected. >> they are obviously doing this in the shadow of the facebook ipo. twitter traditionally has been a pretty circumspect company.

they have done a lot more thinking than they have shared with us, even right now. that both seems to be true. rocco, it is true. they are disciplined on cost. they are going into this very conservatively. they want to make this as unfacebooklike as they can. have you made any calls, any judgment about the stocks as it would open on ipo day. we should use this as an opportunity to really understand the stock. it should be strong and separate. they are going to notice specially on the first day. you should get in right away or wait two weeks. nobody really knows. it really is a black box. twitter has the filing that everybody is talking about. it is a disconnect between what they are right now and the stock price. i would feel really

uncomfortable. >> i want to invest in a company that helps wireless phone companies improve their network, rocco. we are having problems understanding you. >> sorry about that. i look better. i hope i would sound better. >> we are going to be talking about this throughout the road show. >> see what the show still ahead. >> former apple, ceo, john skully, giving us his take of what we will hear when they report earnings. later, kara swisher, from all things dfrm"d" will tell us why. "squawk on the street" will be right back. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you.

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welcome back. time to check in with the cme group. rick santelli. >> good morning. what day is it? it's the day before two-day fed meeting. i think it's an important time to take a step back. i can't tell you how many e-mails i get from you, viewers, listeners, on satellite radio, why is everybody seem to cheer lead for the fed? and it reallies a great question

because kicking the tires is more of the way i like approach markets if you're a trader and want to look at a position, you do a bunch of different analyses, you kick the tires, you look at what happens, for example, if you're in an equity position, rates move up, down, 50 basis points, option volatility, you kick the tires. when it comes to the fed, just consider as we get close to the senate confirmation of janet yellen, does it sound like rand paul is the most unpopular guy in america? because he wants to kick the tire. thursday, what we learned, at fed's balance sheet, 3.84 trillion with a "t," it's on its way to 4 trillion, record size. how many treasuries do they own? 2.1 trillion. how many mortgage backed securities?

1.4 trillion. you can see how these are very large numbers but it seems like in for a penny in for a pound, questioning fed strategy just doesn't seem to be popular. everything is digital in the age we live in. zeros or ones, all in or not in at all. is what the problem with some kicking the tires? cost/benefit analysis. consider this, look at all of the issues that we've learned when the thought was it was going to be a taper, okay? think what gets affected car loans get affected. savings rates get affected. mortgages, housing, gets affected. what else? funding for businesses, capital flows for bad businesses that may not have existed. funding for these momentum stocks like tesla, no matter what you think about the car, the numbers are pretty hard to add up, shades of 1999 and the tech wreck seem to come to mind. think about the rest of the economy. you have all of those. you have health care, the affordable care act, that's kind of up in the air in terms of

shopping and monetizing what costs are. look at what's going on with freddie and fannie, op-ed in the journal, the big find by jpmorgan because fannie and freddie were ignorant. if there was sausage coming out in the back and in the front, believe me, they could see the process going on. we have to make a concerted effort as journalists to kick the tires as we approach 4 trillion with no exist strategy, these are trying times. the fallout of uncertainty is big. maybe the uncertainty didn't sink us with things like t.a.r.p. but that's with hindsight, 20/20, like the commercial. but it's hard to get the 20/20 mirrors. karl, kelly, back to you. >> thank you very much. big numbers for sure. ahead on the show, it's a ketchup change-up. mcdonald's ending its 40-year relationship with heinz. the new ceo, it's the form or

ceo of burger king. we're asking you, mcdonald's fighting heinz is like blank sparring with blank. my customers can shop around.

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let's get to squawk on a tweet. ketchup change-up. mcdonald's announcing plans to end its 40-year relationship with heinz. the reason, heinz's new ceo was formerly the ceo of mcdonald's's rival burger king. also still vice chairman of burger king's board. squawk on the tweet question, mcdonald's fighting heinz is like blank sparring with blank. starbucks sparring with adult contemporary music. like peanut butter spar with jelly. and greg, it's ike icahn fighting ackman, no blood, just ketchup. talking about facebook and what's happening to the high flying names. mentioning facebook's postponing idea of video ads in 2014. >> that may be pressuring the stock. one holder cited that. not sure of the genesis of the

news itself. >> if you invest in social media and on the twitter road show, you might have to sell in other parts of the market in order to raise funds to go into twitter. that's reasonable. >> it's interesting to backcheck that against what's happening with tesla. look at high bid names in the market, tesla, nothing to do with twitter or facebook, down 4%. there's a little bit of that momentum. >> taking profits in some winners. >> close to the low of the session. until apple hits tonight, there's a lot of talk we're in a bit of a waiting mode. it is going to be a busy week. but, apple's tonight, fed meeting's tomorrow, big events, big earnings reports aren't coming out until later on. facebook earnings wednesday along with the starbucks and visa. >> data as well. we're not going to get the employment report at end of the week but a lot of data. >> retail sales, ppi, strip out utilities, it wasn't that high. >> europe because of the time change, right, is different this week? >> yes. no european close.

>> no european close. >> only four hour as head in london, five for the rest of europe. >> the uk gets out from under the storm, which sounds pretty bad the uk doesn't invest in anything that can help it in snow or storms so much of the country's shop downle. the trains aren't running in lond london. >> you're here with us. >> i am. as we approach the anniversary of sandy. >> if you're just joining us, what you missed earlier on. >> welcome to "squawk on the street." here's what's happened so far. >> the markets have priced for, gee, the fed's given us a complete get out of jail pass and the markets are priced for that. which way do we get disappointed? they just have to say a little. >> i the economy's going to hold here, tapering delayed, expectation not until march. there's no major uncertainties that are hanging over the market, at least in these two months coming up.

>> there's so many places where good things are happening. we're not used -- this is like the kansas city chiefs having a perfect record. delta doing well. these things aren't supposed to happen. >> consol energy selling five key west virginia goal mines in a deal valueds about s abous ab billion. >> not so much to buy. supply constraints will weigh on the series. builders sentiment great run. close to a record high. i think you're going to see housing accelerate through the fall. >> the fastest growing fuel internationally is coal. the fastest growing fuel inside the united states is natural gas. so it's a natural for us to hit both markets. this is just a move to get away from the nongrowth domestic side and grow world wild as well as domestically.

>> good monday morning, live at post nine of the new york stock exchange. a check on the markets. cramer called it a bit of a ho-hum session because so much is still to come this week. apple earnings, fed meeting later on in the week, a big slew of economic data. shares of merck slipping after third quarter results did come in light on the revenue front. drug company's forecast above estimates but results hurt by patent expirations and negative currencies. the oral diabetes drug. keep an eye on facebook. you can see what's happened. earnings on wednesday. reports they are beginning to potentially delay the onset of video ads which of course, kelly would be a big revenue driver. >> sure. fresh aoff the launch of its new i point, apple to report after the bell. what will apple's numbers tell us about the state of the company?

we'll talk with john sculley in a moment. like father, like son. senator rand paul is threatening to block the nomination of janet yellen as head of the federal reserve and go into anti-head stance of his father. what does ron paul think what his son is doing? twitter's board could have a brand-new look next week. what changes could be in store, coming up. first up, breaking news. adobe releasing a report on rising threats to google's ad dominance. jon fortt live in san jose with some of that. good morning. >> reporter: good morning. could be good news for facebook in a day they need it. adobe out with its first social intelligence report. evidence of a major shift in digital spending. google still the king of the hill in digital advertising, commanding nearly a third of all digital ad revenue, according to e-marketer but strong trends have momentum in a few upstarts. adobe has unusual insight into some of the biggest retailers, ad placement and site traffic.

track more than 131 billion facebook ad impressions, 400 visitors to serious social sites. as if book's money engine getting started. targeting capabilities are so good, pay for performance ads are getting expensive and pouring more money into affordable cpm brand advertise, cpm for the price for an ad to appear 1,000 time, up 20%. facebook performance ads will make a comeback in the holiday season when retailers will be willing to pay up for clicks from insurances willing to buy right now. interesting insights into twitter. facebook sends more traffic to retailers than its social peers around 70% share, pinterest is in second place with nearly 10% share, up 84% from a year ago. twitter share of referral track also up dramatically, 258%. that bodes well for money making prospects. might be an argument for

facebook talking to pinterest. those folks aren't going to dethrone google anytime soon again, but the giant's ad execs led by susan wojcicki will have a challenge because google plus doesn't factor into the numbers. >> jon fortt for us, thanks. fresh off an iphone launch, new ios, ipads, apple set to report earnings after the bell today. what can we expect from the tech giant and the first real read of sales figures? let's ask john sculley, partner at sculley brothers and former ceo of apple. good morning. >> good morning, kelly. >> first of all, any insight on the quarter for us? there's concern about a trend slowing both for their iphones but tablets. do you think there's something to that, they're not getting the same traction they used to? >> well, we'll find out. i think there are actually positioned very well for tablets. as you know, they were down year-over-year in the second

quarter. they may still be down in the third quarter but by a smaller amount. i think the new products they released for the ipad, both ipad mini and air, looked pretty darn good. real question for the forth quarter is, will they have enough supply of the ipad mini because they haven't given a specific date when it's going to come out. we think it's some time in november. >> so much focus on sales figures, guidance. apple has indicated that 2014 could be a year to watch they have all of the exciting new products in the pipeline. is that still the case? if they can excite people by what's coming next year, they'll overlook any softness in the quarter? >> i think apple's only going to get better. i was very bullish on apple back when the stock fell below 400. i said people are completely underestimating apple. i'll say it again now. that apple is just shot a cannonball across the bow of

microsoft by giving away its i works and ilife sophomore, a big deal, it says you can't make money selling licensed software on ipads and macintosh and iphone. that's a big deal. the other thing, i think, apple well positioned on is they found the soft underbelly of samsung. samsung does beautiful hardware product, great screens, better price points than apple has in emerging markets but samsung doesn't have that loyal ecosystem. apple's always been a system's company. back in the day, when i worked with steve jobs, steve used to say, let's zoom out, let's connect the dots, and then let's zoom in and simplify it. that's what apple has done with its ecosystem. you see with the a4 processor, zoom out, they've brought in a new cap ability and raised the bar on the hardware and now adding software cap abilities to that. i think apple's well positioned

for 2014. >> at the same time, they've got to deal with icahn. obviously keeping distance between them and him publicly. but he hasn't ruled out a proxy fight. hasn't ruled out trying to get on the board or one of his representatives on the board. is the best strategy behinign neglect. >> a smart, successful activist but he goes after companies in trouble. this is not a company in trouble. it's a well-run company. apple has stayed focus in doing what tim cook said. i don't think carl icahn is going to even try or have the kind of success he might have had with other companies like let's say yahoo! when they were in trouble. i believe that he'll continue to try to encourage apple to buy back stock, maybe give a bigger distribution. but the reality is that apples a company that invests in the future and it's got a great amount of opportunities, places

to invest. i'll put my money on tim cook. >> would you put your money on blackberry here, john? >> i don't have any comment about blackberry other than to say it's an interesting company. >> would you consider, do you think it makes sense to buy it as a business? there a future for this company if the right person can come in or is it a matter of taking some of the technology out of it? >> i think apple could be -- excuse me, blackberry could be turned around if it had a new strategy. taking the current strategy and running it better, i don't see much of a future for that. i think hopefully somebody will acquire it, will be able to bring in a new strategy, and there's still life in a brand like blackberry with a new strategy. >> would you be that somebody? >> a lot of people looking at it. i can't say who will buy it. >> john, good to be in the news, no matter what. it's flattering. it's great seeing you again. >> thank you, carl. >> we'll see what apple does

tonight. john sculley talking about apple and blackberry. a look back at financial crisis, it's clear that mortgage-backed securities were one of the big factors in the collapse of 2008. five years later, moving back towards the back practices that got us into trouble in the first place. it's a question, we'll pose that question to someone, "time" magazine called one of the 25 people responsible for the financial crisis. the man who designed mortgage-backed securities. but first, rick santelli looking at bond market, look ahead to the fed meeting and a lot of supply. >> the person who invented the sword shouldn't be held accountable for every murder committed with one, but when it comes to mortgage-backed securities when it comes to treasuries, when it comes to the eve of the two-day fed meeting, we'll kick some tires on the fed. matt malee coming up, talk about normalization and exit, which most likely from a balance sheet over 4 trillion. all at the bottom of the hour. you want to be there. [ bagpipes and drums

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2%. and lorillard, all stocks near record highs. we'll cap it off with smucker's because everyone loves smucker's, up on the day as well. back over to you. >> thank you very much. we want to update you with a breakthrough guest we brought first on "squawk on the street." according to all things, snapchat in talks for another round of funding that will value the company around $3.5 billion. we spoke to snapchat's ceo even spiegel and asked him how the company's going to make money. >> we're not making money now but we're fortunate to have a role mod until ten cent which built a huge message around messaging in china. they've been able to did that without relying on brand advertising. in the near term we'll look at transactions and advertising as well. >> so 3.5 billion, which puts them up there with the titans, the tech industry. again for a start-up that still

has controversy swirling around it when people think how it's used on wall street or how it's used between people. >> probably they might not have a problem with that, given the crowd space and you want attention, whether it's negative or positive. sometimes doesn't matter. >> exactly. >> in terms of not making money if you're on the verge of looking at public markets you don't want to show too much of a profit, something twitter learned as they filed ipo papers. >> you don't necessarily have to be there. look at amazon. >> that working on. they're going to get there. are you fed up with local handy man or cleaning service? today, squawk's grabreak throug the next fix-up job easier. mcdonald's announcing plans to end its 40-year relationship with heinz. the reason, heinz's new ceo former burger king.

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welcome back. the government wants to bring the private market back into mortgage-backed securities. and lou rainiery, involved in helping to create a new asset class of bonds backed by rentals. diana olick spoke with him in washington and joins us with more on that. hi, diana. >> reporter: he still believes that the residential mortgage-backed security is right way to fund the market. but he admit his wished things didn't turn out the way they did back in 2007, when everything came crashing down. his shell point partner recently pulled a major jumbo rmbs deal. he told me demand just wasn't there.

>> the rmbs market is still very fragile. the damage done to it is not anywhere near been repaired. in fact, there's only a handful of buyers for the aaa tranche where they used to be literally hundreds and hundreds. and this last deal you're referring to, the spreads have widened from 100 over to 450, over agencies, comparable agencies to the point where you can get just much better execution just selling to thrifts and insurance companies. >> reporter: do you think the private label market is dead? >> new york it's not dead but it's certainly on oxygen. >> reporter: now, mr. ranieris a big proponent of the reo to rent play. i asked bim t eed him about the backed security. he definitely likes it but there needs to be a clear end point. >> it obviously works, it's sort

of did it's one more version of taking the cash flows off a series of hard assets and secure advertising them it works. i think -- and so i think they're good securities. you'll see more of them. i think the real issue is when i started these conversations over three years ago, you know, it's been great. everybody listened and we got stuff done. but there's a version of it which i think is more important. it was rental with the option to purchase. and so what i'm trying to get people to do now, slow down, say wait a minute, taking units out of the market to rent them temporarily works. but single family housing doesn't lend itself to long-term rental. >> that's interesting because a lot of the investors that i've spoken to in the rental play say this is a long-term play, they expect to hold these homes for 5, 10, 15 years. ranieri sees this as a short-term play. he told me we need to stop

focusing on what to do with fannie and freddie, he separates that out from the private label market back to securities. we need to focus on private investors and stop worrying about fannie and freddie. >> diana olick in washington today into here's question, are you unhappy with cleaning service or local haniman. start-up handy book, booking for household services including home cleaning, household repairs, plumbing and moving. joining us at post nine, great to have you. >> good morning. >> we've seen this work a lot of different times with town cars, like huber has or some other things with contractors. tack a fragmented market, roll it up using a mobile app, right? >> right. book on handybook.com or the mobile a.pp, it's taking the fragmented market and billing a brand that people trust.

>> you just raised $10 million. >> closed around $10 million. we're in 13 cities, we're the leader in new york. we're from miami to l.a., san francisco. what it's all about is making an incredibly easy to book home services. >> how quickly are you growing? >> we've been growing so fast. we're really young. so handy book started a year and a half ago in boston and we moved to new york. we've been growing incredibly fast over the summer. three months straight where we doubled month over month. we do thousands of jobs a week. hundreds of jobs a day near new york alone. it's been a wild ride so far there thinking about you in relation to angie's list, angie's list, first you have to pay for it. and then it's focused on quality. so it's kind of crowd sourcing the best handy man in the community. what you're doing is saying, give us the time, the date, i used it this morning, and you fill in the time, date, and you, here's who we're providing to you and the person had a four-start rating or something. do you see yourself as

complimentary to angie's list or competitor? >> we think about the kind of the way that people book services today and they go through this clunky process, whether it's on a site like angie's list or another site online and look at reviews and a lot of data and go through this clunky scheduling process and really clunky negotiation process. we think that, you know, if you can just instantly book home services, that if the brand is guaranteed and we're offering 100% money-back guarantee, it's a different offering to a process that you can go through on something like angie's list. >> how hard is it to get vendors to join? >> we've had over 100,000 individual vendors apply to join the platform. >> apply? >> they're not automatically accepted. we have a strict vetting process. 3% of vendors that we approve on to the platform to make sure we deliver a great service when you book. >> how -- do you have to try them out? you can't try 100,000 vendors out. >> we have a 14-step process,

social security back checked, referenced checked, background checked, a lot of online reference checking that goes on to make sure when we put somebody on in the platform, last step we interview every person. >> won't that be a bottleneck to growth? how many people do you have to hire to extent the vetting process, for example, even across the country. >> we're in 13 cities. we bring a vendor on to the platform, we want them to do a lot of work with handy book. it's not a case we bring somebody on and they do a small amount. it's about bringing people on doing 40%, 60% of the work on handy book's platform. compared to the likes of huber, they've gone through the same process, they're individually vetting the providers that what hani book is all about. >> do you take a cut when the job is made. >> it's like three steps to make the booking on the handy book app, what happens we process payment, we take a small percentage and pass payment on to the service provider once the customer's happy.

>> fascinating to watch. going public, want to be bought, long-term plan. >> we're at the beginning of the beginning of how this is evolving. people booking on the mobile app, it's just the beginning so far. >> we'll be watching. ceo and co-founder of handy book. >> through all of his years in congress, ron paul's opposition to the federal reserve was well known, even got into arguments with ben bernanke. here's one of those exchanges. >> do you think gold is money? >> no. >> it's not money? even if it's for 6,000 years somebody reversed that and elimit had economic law? >> well, it's -- you know it's an asset. would you say treasury bills are money? i don't think they're money either. >> why do central banks hold it. >> it's a former reserve. >> why don't they hold diamonds.

what does ron paul think of his son's threat to the nomination of janet yellen? twitter's boarder to become diverse. kara swisher who broke the news will tell us about it as soon as "squawk on the street" comes right back. the american dream is of a better future, a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does. that's what they can do with you. that's how ameriprise puts more within reach. ♪

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gates, i, and many others have? you knew it wouldn't be long before carl took this to another level. >> not with these two rolfed. >> yes. let's bring in bob pisani with a look at what's moving at big board. >> we don't know much about his charitable contributions, do we? bill gross'. never said anything about it. >> he opened the glodoor. >> its pre-apple. everybody's waiting for that tonight. we've got the fed this week. mr. paul, senator paul, not exactly helping with the yellen nomination, that's not helping confidence. take a look at what's going on. more concern about the housing numbers, pending home sale numbers not good for market psychology. a defensive tone to the market today. the story for the month. consumer staples and telecom leading. health care's helping today. bristol-myers, a strong mover in that group. slightly defensive tone to the overall market. pending home sales numbers, biggest drop since may 2010, not

good for the overall market psychology. we're not only in an economic recovery but a housing recovery. numbers do not help support that concept. that's why the home building stocks are to the downside today. the big high beta names, high volatility names also under pressure today. you could see this all the time now, facebook, tesla, yelp, the usual suspects. days where the market psychology's off, you see them down, more than twice what the overall market is doing today. another area of concern, besides home builders and the high beta names is china. remember what happened last week with nq. this is a chinese mobile company. bottom line is, we went from 23 to 8 in a few days. muddy waters called the company an outright fraud. the company will vigorously contest the allegation. a tremendous psychological effect on the chinese stocks. look at some of the chinese internet stocks.

5% declines some of the big names like renren. solar stocks, i'll close with that, the same situation. last several days, 11, 7, 8% declines in a single day in big solar names. it's all about psychology right now. that nq really hurt overall chinese trading in those stocks. >> interesting. >> thanks, bob. we want to send it over to dominic chu. keep an eye on jcp. >> that retailer spike up after the company reaffirmed it exp t expects to see positive same-store sales out of the third quarter and into the all-important fourth quarter. it's beginning to see more predictability in its performance across the different areas. so jcpenney shares spiking up 5%, 6% overall. back over to you. >> dominic chu, back at hq. the treasury department will see 96 billion in 2, 5s and 7s

this week. rick santelli in chicago with a look at what treasury supply's going to mean. rick? >> yes. we have treasury supply due to the end of the month, one day early. of course, several days after that supply, the fed usually comes in and buys many issues, or a good deal of them. i'd like welcome our guest, matt maley. thanks for taking time. >> great to be here. >> all right. let's start with what i call fed roulette. you know, when the government or a form of the government or agency of the government does anything, usually there's a language swath of insiders in whatever industry that squawk a bit. but what stocks at record levels the insiders have duct tape on their mouth. why would they kick the tires on the fed when they're reaping benefits based on the programs, although they aren't the benefits the programs were designed to accomplish? will you weigh in, matt? >> well, you see what some of the insiders are doing rather than saying. we have people selling in a

major way. we saw this over late last week with the president of blackstone selling another $88 million of stock which makes 190 million of stock on the year. they see something they don't like. and one of the things that i think is a problem is that what the fed saw earlier this summer was what the -- if they started too taper in think way, they'd lose control of the stock, of the bond market. that's going to be a problem. that's where a lot of insiders are doing. look in the past -- >> the news today, matt, whether it's snapchat, instagram, twitter, would these companies be able to amass the market caps if it wasn't for the liquidity in the system? would the teslas be where they are or the buy-backs some of the people like carl icahn are trying to push apple or some of microsoft? it just seem like insiders especially stocks, because there's less stocks to trade

with the buy-backs from a supply standpoint, it really is taking over a good cluchk of the economy. you don't believe normalization is possible without a pretty rough road, do you? >> no, exactly. we have -- with -- we have heard about earnings growth being good in the 4% to 6% range. look at standard & poor's website. we have gdp growth at 2%. is that the kind of growth that we -- that should enable the stock market to hit all-time highs? i don't think so. i think it's liquidity pushing market higher. look what happens when liquidity -- >> what happened after qe-2 ended? >> 15% -- 15 and 17% drops in the market respectively right after those programs ended. so, this has been a big positive part of the market. it may continue over the short term. over the long term, some point

it's got to end whether the fed makes it end or the market makes it end, it's going to be ugly when it happens. >> we didn't get even nhow it affects housing, cars, funding, that's for another time. carl, back to you. >> thank you this morning. turning now to twitter, the company is planning to name a woman to its board though it will be after the ipo. kara swisher broke that story and joins us on the cnbc news line. good morning. what caught my attention not twitter's going to pursue a woman, but the top pick was hillary clinton or condoleezza rice or madeleine albright on the position? >> they're looking for an international person. hillary clinton was their perfect candidate for the board. obviously, not available. but they want someone with international experience because it's global and they do have issues globally, if you think

where they're band across the world. >> they could land a condoleezza rice or a mad lynn albright or are they shooting for the moon and hoping to fill the areas they hope to fill? >> a lot of strategic consulting with companies, douz work with a capital firm. she's quite involved in the tech community and is aware of. obviously stanford you have a big awareness. >> there are some ties to the clinton camp, clearly. katie jacobs stanton, having work for her at state. would that be their first choice? what degree would a politician want to get in the middle of the discussion of give twitter equal access though their business may be on the line that kind of thing? >> mrs. clinton is -- secretary cl clinton is not the board member.

several board members thought it would be the perfect candidate on the board. but that's not going to happen. that would be a very big long shot. dreaming of the perfect candidate for themselves. >> right, right. what's a practical implication of this? is this a case where the twitter bore, having come under public pressure realize we better come after a woman? there's something distasteful about it all. >> to be fair, they've been searching especially the ceo for a woman. it's just they've been slow in doing it. they had proposed several different women to the board. he had -- they had been shot down. and so, one was an nbc executive, another does -- i can't remember. they haven't been able to settle on one. people feel they shouldn't have to have a woman on the board to be on the board. it's striking everybody on the board happens to be a man. you know what i mean? it's a false argument to say they shouldn't have a woman. it's unusual that they don't. >> more broadly, how do you think the road show's going to

do? >> they're on it right now. they're going to philadelphia, baltimore, you know, all of the regular places. they're trying to keep it super simple. they don't have a lot of shares to sell. it's not like a facebook blockbuster. they're trying to keep it tight, the whole thing. i think we'll see how investors like the idea that it loses money yet it has great potential. sales are going up but there's the fact they don't make money. i think that's going to be an issue with investors. but there's not enough shares to make a difference, i think, here. >> an interesting point. i also found interesting it that they posted the 37-minute road show on the website. do you think that's going to become more common to the retail audience? >> twitter's a retail company. you have marisa mayor doing her own show. she may try to take your job, kelly, i don't know. >> bring it on. >> they like to see themselves. why not?

it work, right? they're going to the people with their business, so why not try here? >> fascinating. kara swisher joining us, gets ready to go public. thanks very much. >> when we come back, senator rand paul following in this father's footsteps showing the same anti-fed stance threatening to block janet yellen's nomination. what does ron paul think of what his son's doing? we'll ask him in a minute. bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon.

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senator rand paul threatening to put a hold on the nomination of janet yellen as head of the fed. rand paul's father always critical of the fed. he's urged the fed be audited. dr. ron paul, the host of the ron paul channel. he joins us from texas. the ron paul channel, congressman? are you trying to compete with us now. >> well, that would be a major task. yes, i'd like to get a different spin on thing, you snow maybe challenge the fed now and then and challenge those who don't defend the the free market like i think it should be defended. it does bring us what your son's doing. it's almost as if you handed him the football and said go make these things that i tried to

make happen finally happen. what chance dozen you give this legislation? >> she'll be nominated, that legislation's going to pass, i don't think anybody's questioning that. but you know, i -- i haven't talked to him about what he's doing. i have read it in the paper and heard it on the news he might put this hold. but you know, but he has a condition, all he wants is a vote on more transparency of the fed. get an audit of the fed, that's pretty minor. i think the time's ripe now. we had a couple of votes in the house and we were able to get good support in the house. people are for this. yellen, now that she's coming up and will be appointed chairman of the fed, her reputation is for transparency. i would think maybe we'll get support for her because of her announcement she wants more transparency of the fed. we deserve it. we need to know what the fed's doing and not having trillions of dollars spent and churned

through the world economy without us not knowing what's happening. >> we've never had more transparency from the institution. i think people, you know, the sausage making has been revealed. we get massive statements from them, there's press conferences, pages and pages of their economic projections. it kind of been like the emperor's taking his clothes off. you sort of see how it all happens. what more transparency are you asking for? >> i'd like to know what they're doing internationally. we don't know details of the trillions of dollars used to bail out banks and central banks around the world and corporations during the crisis. so, yes, we should know all about that. the numbers that they give you, i mean, i don't think they are are all that revealing. in some sense, yes, we know a little bit more, we get the minutes sooner, we know a little bit. believe me, the big stuff is done in secret and i think the american people want

transparency. they're tired of being spied on and sick and tire of having privacy of the federal reserve and privacy of the u.s. government. they're tired of all of that. they want more openness. i'm glad yellen is on the side of the issue. some days you might ask her, what does she think of the audit of the fed since she supports more transparency. >> let's pretend you're right, her appetite for transpair ep rent si extends to letting the gao in. i don't think she wants to end the fed. do you want them audited or a precursor to their destruction? >> well i don't want to destroy anything. i want to repeal bad laws and monetary policy. and my idea is that the fed will self-destruction. they'll lose its efficiency when the dollar goes down and is no longer a reserve currency of the world. that's what we're working very hard on. we're losing credibility

military, which i don't lament, i think we shouldn't be the policemen of the world. we've lost so much credibility with our allies. all we have left is hanging on to economic power which is very fragile because we aren't the powerhouse economically either. it's shifting to the east. that's where the wealth is. >> there's plenty of blame around washington for that one. i want to go back, i was surprised you said that you heard about rand paul's move from the press accounts. you don't talk about this at all? >> not really. he's pretty busy, you know, and i'm pretty busy. we'll see each other at christmastime. we'll probably talk about family things. no, we didn't discuss this. so his motivations and all, you'll have to get details from him. but see i think it's important that you add on to your statement that he wants to hold up the appointment on her but it's mainly to get more transparency and have audit the

fed bill passed and that's very popular with the american people. >> it's time for a paul family reunion but that's just me, congressman. i wonder how politically sterile do you think a gao audit can be? if you're leery of government involvement overall, what are they able to tell you? >> a little bit more than we have now, you know? no, it's not going to be perfect. obviously that is the case. when they fget to auditing the gold, they should get a private company to do that. they're his hysterical when you, is the gold there? we haven't had a true audit of the gold for 50 years. has gold been loaned out, sold, who owns it? germans want their gold back from the fed. the fed says we'll give it back to you in six or seven years. what's going on? why don't you care about that? something very strange about that. now the germans are annoyed with that, they want their gold back,

now. think of merkel, we spy on her, listening to her private phone for years and years. no wonder people are getting annoyed. it should make us angry at the country, it should shake up the american people and say let's clean house here, let's have a different type of government where we don't think that we run the world and shouldn't bully people around and think we can spy on everybody every minute of the day. >> senator ron paul. rand, give your father a call. thank you for joining us. >> thank you. billionaire once claimed he's richer than carlos slim, warren buffett but he's closer to bankruptcy than multibillions. we'll bring you the story when "squawk on the street" continues. presentations on res. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer.

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biggest falls of grace in history. once worth $34 billion ready to file for bankruptcy at one of his biggest companies. michelle caruso-cabreras that story. >> he told everyone he was going to be the world's greatest tycoon because of all of the oil he was going to drill off the coast of brazil. if ever an avatar for the brazilian boom, it was batista. brazil's president at his side as he unveiled the port that was supposed to be 1 1/2 times the size of manhattan. if you're drilling so much oil, you need a big port, right? why not start a massive shipping

company as well? build ships to move all of your oil to that huge port we're showing you now. a former race car driver and he told maria he was richer than bill gates, warren buffett and carlos slim. >> i have created five companies that have in them embedded resources worth $2 trillion. very low cost to produce it. it's a question of time, i'm sorry. i don't know if i'm going to pass slim on the right or left side but it's going to happen. >> guess what? his company ogx never did find that much oil and what they did find cost to much to get out. bankruptcy filing expected any time. take a look who was in the pool with him. bond funds controlled by pimco, black co, have ogx bonds which have fallen to 7 cents. those familiar with the situation some folks bought at

full face value, bonds issued last year or the year before. ge also invested $300 million in his parent company ebx. they wrote it down by a third, more than a year later. here's the stock chock of ogx. tells the whole story. mr. batista declined to comment. back to you. >> michelle, given how tied he was to brazil, got to be an embarrassment for them and they've got a big year next year. >> absolutely. two sayings, kelly, about brazil. brazil is a country of the future and always will be. and brazil never misses an opportunity to miss an opportunity. and once again, this situation is emblem afteric of that. >> how true that is. michelle caruso-cabrera, with the gory details this morning, thank you. coming up -- we told you that mcdonald's is announcing plans to end its 40-why relationship with ketchup

maker heisey. ceo bernardo hees former ceo of burger king. brings us to the morning's squawk on the tweet. mcdonald's fighting hyeinz is like blank sparring with blank? (vo) our new planes don't fly any faster. but it sure feels that way. because with power ports... and wi-fi... and in-seat entertainment, for everyone on board, now when you fly, time flies too. (flight attendant) sir, we're about to land. (vo) we're adding a brand new plane, with all this, every week. it's just one way we're building the new american.

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squawk on the tweet monday morning. a ketchup change-up. as reported mcdonald's announcing plans to then 40-year relationship with heinz. the reason, heinz's new ceo formerly the ceo of mcdonald's's rival burger king. still the vice chairman of burger king's board. the "squawk on the street." mcdonald's fight heinz is like blank sparring with blank? james writes, like coke sparring with the original formula and going to new coke. like the fish sparring with the chips. mcdonald's fighting with heinz is like rocky sparring with pauly. very nice. good comparisons. warren buffett buying a pepsi. >> conagra up 1%.

i don't know if that has anything to do with it. >> an eye on a few stocks. facebook one seeing a reversal train day, obviously had an incredible run over the past few months. random headlines about potentially delaying onset of ads. jcpenney another one. courtney reagan confirming reiterating positive comps before the end of the year. nice jump there. bristol-myers, fascinating story, i think, mostly driven by positive study datas for a lung cancer drug. it's likely better than any single agent tested to date in the treatment of lung cancer and perhaps as good as the current standard combinations. they're going to present the full paper tomorrow at world conference on lung cancer. >> look at apple, heading into the earnings report today that's a key one. roughly flat. so i think investors, there's so

much written about how disappointing the quarter may be, that's probably keeping people from saying, at least expectations are reduced. there they are. barely higher. >> see if they mention icahn or certainly guidance for q4 key. back to headquarters and check in with scott wapner and the halftime. >> what we're following today, core holding, what apple must deliver to keep the stock on the move and its competitors on edge. emerging risks. a big warning today about where investors are placing big bets abroad. live right here in the house on set with our halftime play book. stocks on pace to do something they've only done four times in the past 30 years and that's finish september and october with gains. traders are focused on several big earning reports, including apple today. econdata and the fed. josh brown, big week ahead. how are you going to play it? >>